LONDON: Sterling fell against the dollar and euro on Friday, retreating from the previous session’s one-month highs, as investors braced for Britain’s beginning the formal process of leaving the EU next week.
An interview with Bank of England (BoE) policymaker Gertjan Vlieghe in The Times also laid out the argument for the BoE looking through further rises in inflation over the next few months in aid of supporting the economy.
Strong inflation and retail sales data have added to expectations the BoE might lean toward supporting sterling with higher interest rates over the next year, pushing the pound 1 percent higher against the dollar this week.
But investors worry that Prime Minister Theresa May’s invoking Article 50 next Wednesday may trigger a period of political jousting with its EU partners that will lay bare the scale of the risks to the economy from 18 months of talks.
Sterling dipped 0.3 percent to $1.2484 in morning trade in London and was 0.4 percent lower at 86.47 pence per euro.
“Uncertainty (surrounding Brexit) remains intact,” said Credit Agricole currency strategist Manuel Oliveri.
“Rate expectations are unlikely to rise because the BoE is linking its monetary policy stance to this uncertainty, and that is why we do not believe sterling has more upside from current levels.”
Since minutes from the BoE’s meeting last week showed a number of monetary committee members close to voting for a rise in rates, signals from official have been mixed.
Asked about Tuesday’s inflation data, BoE Gov. Mark Carney said it was important not to overreact to a single data point.
Deputy Gov. Ben Broadbent on Thursday said it was possible interest rates would rise, but also highlighted a strong sense of caution among investors about the outlook for Britain after Brexit.
Policymaker Gertjan Vlieghe believes a rise in inflation to more than 3 percent might not prompt him to consider raising interest rates because the increase would probably be temporary, The Times newspaper reported on Friday.
Brexit risks, BoE pull sterling off highs
Brexit risks, BoE pull sterling off highs
Emerging markets driving global growth despite rising risks: Saudi finance minister
RIYADH: Emerging markets now account for a growing share of global output and are driving the bulk of world economic expansion, Saudi Arabia’s finance minister said, even as those economies grapple with rising debt and mounting geopolitical risks.
Speaking at the opening of the annual AlUla Conference for Emerging Market Economies on Feb. 8, Mohammed Al-Jadaan said the role of emerging and developing nations in the global economy has more than doubled since 2000, underscoring a structural shift in growth away from advanced economies.
The meeting comes as policymakers in developing markets try to keep growth on track while controlling inflation, managing capital flows and repairing public finances after years of heavy borrowing. Saudi Arabia has positioned the forum as a platform to coordinate policy responses and strengthen the voice of emerging economies in global financial discussions.
“This conference takes place at a moment of profound transition in the global economy. Emerging markets and developing economies now account for nearly 60 percent of the global gross domestic product in purchasing power terms and 70 percent of global growth,” Al-Jadaan said.
He added: “Today, the 10 emerging economies and the G20 alone account for more than half of the world’s growth. Yet, emerging markets face a more complex and fragmented environment, elevated debt levels, slower trade growth and increasing exposure to geopolitical shocks.”
Launched in 2025, the conference this year brings together economic decision-makers, finance ministers, central bank governors, leaders of international financial institutions, and a select group of experts and specialists from around the world.
